Health Plans Must Comply with New EFT Transaction Standards

The Centers for Medicare & Medicaid Services (CMS) announced, Jan. 5, standards effective Jan. 1, 2012  for health care electronic funds transfer (EFT) transactions. The standards, unveiled in an interim final rule with comment period, will apply to all Health Insurance Portability and Accountability Act of 1996 (HIPAA)-covered entities.

The purpose of the transaction standards is to “enable electronic data interchange using a common interchange structure, minimizing the industry’s reliance on multiple formats,” according to the final rule. The standards also are expected to “significantly decrease administrative burden on covered entities by creating greater uniformity in data exchange” and reducing the number of paper forms needed to transmit data. Department of Health & Human Services (HHS) Secretary Kathleen Sebelius commented that the new standards would mean “health care professionals will spend less time filling out paperwork and more time focusing on delivering the best care for patients.”

The first of two EFT transaction standards—the CCD+Addenda implementation specifications in the 2011 National Automated Clearing House Association (NACHA) Operating Rules & Guidelines—specifies the format when a health plan orders, authorizes, or initiates an EFT with its financial institution. The second standard— the TRN Segment implementation specifications in the X12 835 TR3 for the data content of the Addenda Record of the CCD+Addenda—specifies the data content to be contained within the EFT.

Among the specific advantages of the EFT standards, according to CMS, are cost savings (no printing checks, purchasing and stuffing envelopes, or manually depositing checks, for example), fraud control, and improved cash flow and cash forecasting. CMS predicts the health care EFT standards will have the most substantial cost and benefit impacts on physician practices, hospitals, and commercial and government health plans. The agency asserts that long term savings will more than pay for the software updates and other short-term costs necessary to comply with the standards (costs are estimated to be less than $200 per provider over 5 years), while also being better for the natural environment (due to decreased paper use).

EFT standards in the planning stage now include a standard unique identifier for health plans, a standard for claims attachments, and requirements that health plans certify compliance with all HIPAA standards and operating rules. CMS estimates that together these EFT standards will save physician practices and hospitals between of $3 billion to $4.5 billion over the next 10 years.

For more information on the EFT Transactions Standards to be in place by Jan. 1, 2014, see the CMS Fact Sheet.

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